By Nick Toscano
Australia's heaviest greenhouse-gas emitter, AGL, will face a shareholder push to bring forward the closures of its remaining coal-fired power plants by at least 12 years to help limit the worst impacts of climate change.
In a new effort to align the energy giant's plans with stronger climate action goals, investors will vote on a resolution demanding the closure of AGL's carbon-intensive coal-fired generators in Victoria and New South Wales by 2036, much sooner than the intended 2048 retirement of its Loy Yang A plant in Victoria's Latrobe Valley.
AGL plans to run its Loy Yang A coal-fired power station in Victoria until 2048.Credit: Simon O'Dwyer
AGL operates coal-fired and gas-fired power generators and renewable energy assets around the country, supplying 3.7 million customer accounts. In the 2019 financial year, it was responsible for more than 42 million tonnes of carbon dioxide emissions, the most of any Australian business.
The Australasian Centre for Corporate Responsibility, the shareholder activist group that filed the resolution ahead of the company's next annual investor meeting, said AGL's emissions were "not a matter to be taken lightly".
"They make up 8.1 per cent of Australia's total emissions," the group's climate director, Dan Gocher, said. "These coal stations are fossils in their own right and as they age, their reliability declines and the costs of maintenance increase."
AGL confirmed it had received the shareholder resolution and said it was being considered.
"Our response will be set out in AGL's Notice of Meeting to be published in late August," a company spokesman said.
Like many of the nation's top fossil fuel companies, AGL has faced a rising tide of pressure both from activists and increasingly climate-conscious major investors to improve its carbon credentials and, in particular, reduce its reliance on coal, the world's worst-polluting energy source.
In June, AGL became the first major ASX-listed company to tie long-term executive bonuses to climate goals such as investing in more renewable energy assets and selling more "carbon-neutral" energy plans. But the company disappointed some environmentalists by making no mention of plans to bring forward forward the retirement of coal-fired power plants, the biggest source of its emissions.
After it closes its Liddell power station in NSW in 2023, AGL has said it will continue operating its Bayswater plant in the Hunter Valley until 2035 and Loy Yang A until 2048 unless customers' demands rose to the point that they were prepared to pay the higher prices caused by removing coal from the grid sooner.
"If, universally, our customers said tomorrow 'we want nothing but green power and we're prepared to pay the price of that' then we would meet that customer demand," AGL chief Brett Redman said in June.
The world's top sovereign wealth fund, the Norwegian Government Pension Fund Global, dumped its 0.46 per cent holding in AGL earlier this year, citing its use of thermal coal.
Coal-fired power generation, although in decline, still supplies the dominant share of the nation's electricity needs, accounting for 56 per cent. However, the operators of the remaining generators have been increasingly flagging the prospects of bringing forward their retirement schedules amid ever-growing maintenance costs required to keep the ageing and failure-prone equipment running, and doubts about their economic viability in a lower-carbon future.
Mr Gocher said AGL's expenditure to sustain its existing operations had risen from 25 per cent of total capital expenditure in 2013 to potentially more than 70 per cent.
"This allocation of capital expenditure suggests AGL is maintaining its coal-fired power stations at the expense of accelerating its transition," he said.
"AGL continues to affirm its commitment to Paris targets despite planning to operate its coal-fired power stations until the end of their technical lives."